LECTURE 


# 


UPON  THE  PRINCIPLES  OF 


COMMERCIAL  INTEGRITY, 

AND  THE 

, \ {X  \ ' ■ • t > rv 

DUTIES  SUBSISTING  BETWEEN 

A DEBTOR  AND  HIS  CREDITORS. 

WITH 

SUGGESTIONS  OF  THE  CAUSES  OF  THE  DEFECTS  IN  THESE  RESPECTS  IN 
THE  AMERICAN  COMMERCIAL  CHARACTER. 


DELIVERED  TO  THE  MERCANTILE  LIBRARY  COMPANY, 
MARCH  2,  1832. 


BY  JOSEPH  HOPKINSON 


PHILADELPHIA: 

CAREY  AND  LEA-CHESTNUT  STREET. 

1832. 


The  following  Lecture  is  published  at  the  request  of  a number  of 
the  gentlemen  who  heard  it  delivered. 


James  Kay,  Jun.  & Co.  Printers, 
No.  4,  Minor  Street. 


LECTURE. 


Gentlemen, 

The  subject  of  which  I shall  treat,  in  this  lecture, 
is  one  in  which  you  have  a deep  interest,  individually 
and  nationally — that  is,  the  commercial  character  of  the 
merchants  of  the  United  States,  for  integrity  and  honour, 
in  the  relations  of  debtor  and  creditor.  The  sound  prin- 
ciples which  ought  to  govern  this  relation,  have  been  so 
neglected  or  abused,  as  to  have  brought  a stain  upon  the 
American  name,  and  sunk  it  below  the  standard  of  mer- 
cantile morality  of  other  countries.  My  views  of  this  im- 
portant subject  will  be  exposed  to  you  without  palliation  or 
disguise ; my  opinions  expressed  with  absolute  frankness. 
The  time,  however,  imposes  a brevity  upon  me,  which 
will  preclude  the  fullness  of  evidence  and  illustration, 
which  justice  to  those  opinions  would  demand. 

There  is  no  class  of  our  citizens  on  whose  conduct 
the  reputation  of  our  country,  for  probity  and  honour, 
so  immediately  depends,  as  our  merchants.  The  ope- 
rations of  others  are  confined  within  our  own  limits, 
and  the  good  or  evil  they  may  do,  is  seldom  felt  or 
known  beyond  them.  The  merchant,  on  the  contrary, 


072. 


4 


in  the  prosecution  of  his  business,  touches  every  portion 
of  the  earth,  and  comes  in  contact  with  the  people  of 
all  nations.  Whether  our  statesmen  are  wise  and  patri- 
otic or  not ; our  legislators  enlightened  and  eloquent ; 
our  divines  accomplished  and  pious;  our  lawyers  and 
physicians  skilful,  learned  and  faithful ; our  mechanics 
ingenious  and  industrious,  are  domestic  concerns ; ques- 
tions of  opinion  or  prejudice,  about  which  strangers  may 
differ  with  us,  without  any  imputation  upon  us  as  a 
moral  and  just  people : but  whether  our  merchants  are 
honest  or  not ; whether  they  are  upright  and  conscien- 
tious ; whether  it  is  safe  or  dangerous  to  deal  with  them, 
are  questions  of  fact,  in  which  foreigners  have  a close 
and  daily  interest ; are  questions  not  of  theoretical  specu- 
lation, but  to  be  decided  by  the  evidence  of  experience; 
by  the  actual  transactions  of  business,  not  to  be  misun- 
derstood by  any  capacity,  nor  concealed  from  the  dullest 
comprehension. 

The  American  merchant  then  should  never  forget, 
that  he  holds  the  character  of  his  country,  as  well  as  his 
own,  in  a sacred  trust ; and  that  he  betrays  both,  when 
he  enters  into  the  crooked  paths  of  dissimulation  and 
trick,  or  the  broader  and  fouler  ways  of  dishonesty  and 
fraud.  Strangers  can  know  us  only  by  the  individuals 
they  deal  with,  whom,  in  the  spirit  and  usage  of  trade, 
they  will  take  as  specimens  or  samples  of  the  whole.  If 
they  find  their  confidence  abused,  the  reproach  is  visited, 
not  only  on  the  fraudulent  merchant,  but  on  his  nation, 
and  we  are  all  condemned  for  his  iniquitous  cupidity. 

It  is,  I fear,  a truth  we  cannot  question,  that  the 


5 


character  of  an  American  merchant  is  not  highly  re- 
spected abroad ; it  is  looked  upon  with  distrust;  it  has 
been  severely  reproached.  Is  this  merely  European 
prejudice?  Is  it  an  injustice  of  which  we  may  com- 
plain ? Have  we  given  no  grounds  for  it  ? Is  there 
not — or  has  there  not  been'  for  I believe  we  are  im- 
proved and  improving  in  this  respect,  a looseness  of 
principle  and  practice  in  contracting  and  paying  debts, 
very  rare,  if  not  unknown  among  men  of  the  same  stand- 
ing in  trade,  in  Europe,  at  least  on  the  continent?  The 
ambition  to  do  a great  business  is  universal  and  devour- 
ing here ; the  disposition  to  contract  debts  becomes 
eager  and  reckless  *,  the  obligation  to  pay  them  is  but 
faintly  felt,  and  the  failure  to  do  so  hardly  produces  a 
sensation  of  shame  in  the  defaulter,  or  any  resentment  or 
neglect  towards  him  on  the  part  of  his  friends  or  the 
public.  Our  commercial  community  seem  to  make  a 
common  cause  with  every  delinquent  trader,  and  to  treat 
the  most  criminal  extravagance,  the  most  thoughtless 
indiscretion,  the  most  daring  and  desperate  speculations, 
with  the  lenity  due  to  accident  and  misfortune.  When 
the  catastrophe  which,  sooner  or  later,  awaits  such  pro- 
ceedings, comes,  a hasty  arrangement  is  patched  up 
between  the  debtor  and  his  creditors,  altogether  under 
the  dictation  of  the  former,  who  deals  out  the  remnants 
of  his  property,  if  there  be  any,  to  his  friends  or  favour- 
ites, at  his  will  and  pleasure,  with  the  air  of  a Lord 
Chancellor,  and  the  creditors  have  nothing  to  do  but  to 
hear  and  submit  to  the  decree,  in  the  shape  of  an  assign- 
ment. Debtor  and  creditor  retire  from  this  dishonest 


6 


mockery,  mutually  dissatisfied ; the  one  to  resume  his 
business,  his  station  in  society,  his  pride  and  importance, 
his  manner  of  living,  without  any  visible  degradation  or 
retrenchment,  and  the  other  to  repeat  the  same  system 
of  credit,  with  the  same  disastrous  credulity.  It  is  not 
unfrequent  for  the  same  individual  to  run  a second  time 
over  the  same  course  of  extravagance,  folly  and  ruin. 
If  this  is  the  manner  of  our  settling  the  affairs  of  an  in- 
solvent, we  may  imagine  what  becomes  of  the  foreign 
creditor  and  his  claims  ; and  cannot  be  surprised  if  he 
is  loud  in  his  complaints.  In  some  instances,  there  is  so 
little  feeling  of  mortification  excited  by  bankruptcy  ; so 
little  remorse  for  the  losses  which  others  will  suffer  by 
it,  that  the  whole  thing  is  turned  into  a jest.  Two  of 
these  reciprocal  drawers  and  indorsers,  these  mutual 
assurance  gentlemen,  were  enjoying  themselves  at  a con- 
vivial dinner,  when  one  of  them  suddenly  took  out  his 
watch,  and  observing  that  it  was  3 o’clock,  (the  hour 
of  protest),  cried  out,  il  Tom,  we  are  broke.”  The  joke 
was  thought  excellent,  and  set  the  table  in  a roar.  Is 
not  this  a criminal  levity  ? Is  it  not  to  make  sport  of 
plunder  ; to  create  distress  and  then  to  mock  it. 

I am  far  from  intending  to  involve  every  insolvent 
trader  in  these  reproaches,  and  I repeat  with  pride,  that 
such  heartless  depravity  is  becoming  less  frequent  among 
us.  Bankruptcy  is  often  the  consequence  here,  as  else- 
where, of  inevitable  misfortune,  and  is  met  with  fidelity 
and  honour.  The  life  of  a merchant  is,  necessarily,  a 
life  of  peril.  He  can  scarcely  move  without  danger. 
He  is  beset  on  all  sides  with  disappointments,  with  flue- 


7 


tuations  in  the  current  of  business,  which  sometimes  leave 
him  stranded  on  an  unknown  bar,  and  sometimes  sweep 
him  helpless  into  the  ocean.  These  vicissitudes  depend 
on  causes  which  no  man  can  control ; and  are  often  so 
sudden,  that  no  calculation  could  anticipate,  or  skill 
avoid  them.  To  risk  much,  to  be  exposed  to  hazards, 
belongs  to  the  vocation  of  a merchant ; his  usefulness  and 
success  depend,  in  many  cases,  on  his  enterprise.  He 
must  have  courage  to  explore  new  regions  of  commerce, 
and  encounter  the  difficulties  of  untried  experiments. 
To  be  unfortunate  in  such  pursuits  is  no  more  disgrace- 
ful to  an  upright  trader,  than  to  fall  in  the  field  of  battle 
is  dishonourable  to  the  soldier,  or  defeat  to  a General 
who  has  done  all  that  valour  and  skill  could  achieve  to 
obtain  the  victory.  Very  different  is  the  case  of  one 
who  with  but  little  of  his  own  to  jeopard,  commences 
business  on  a system  of  commercial  gambling,  and  makes 
his  desperate  throws  at  the  risk  of  others  ; who  embarks 
in  rash  and  senseless  adventures,  condemned  by  common 
sense  as  by  honesty  ; and  when  they  end  in  a total  wreck, 
looks  his  abused  creditors  coolly  in  the  face,  and  offers 
them  a list  of  bad  debts,  and  an  inventory  of  worthless 
goods,  provided  they  will  release  and  discharge  him  for 
ever  from  their  claims. 

It  cannot  be  denied,  that  such  a course  of  proceeding 
between  a bankrupt  and  those  who  have  trusted  him, 
that  the  authority  he  assumes,  and  sometimes  insolently, 
over  his  property,  in  exclusion  of  those  to  whom  it  right- 
fully belongs,  are  utterly  inconsistent  with  the  principles 
of  honest  dealing ; they  bespeak  an  unsound,  may  I not 


8 


say,  a corrupt  state  of  the  mercantile  body,  so  far  as 
they  extend,  and  are  destructive  of  all  security  in  com- 
mercial transactions.  These  evils  must  be  probed  and 
corrected  ; every  honest  man  has  an  interest  in  remov- 
ing them,  and  in  elevating  the  commercial  character  of 
his  country.  Our  traders  must  not  consider  themselves, 
or  allow  others  to  consider  them,  as  petty  traffickers  for 
petty  gains  by  all  advantages:  but  as  merchants , in  the 
fullest  and  most  honourable  sense  of  the  term  ; as  the 
men  by  whom  the  great  operations  of  the  world  are  sus- 
tained, by  whom  the  intercourse  of  the  human  family, 
however  scattered  and  remote,  is  kept  up  ; as  the  instru- 
ments of  civilization  and  intellectual  improvement ; as 
the  agents  to  distribute  the  comforts  and  luxuries  of  life 
over  the  whole  surface  of  the  globe.  By  them  the  whole 
race  of  man,  of  every  variety  of  complexion  and  charac- 
ter, and  wheresoever  they  may  inhabit,  are  brought 
together,  and  taught  to  know  each  other  and  to  aid 
each  other.  They  are  the  peacemakers  of  the  world, 
for  they  show  it  to  be  the  interest  and  happiness  of  all  to 
remain  at  peace ; and  they  demonstrate  that  it  is  easier 
to  obtain  the  good  things  we  may  desire  by  commerce 
than  by  conquest ; by  exchange,  than  by  arms.  They 
soften  national  asperities,  and  remove  unjust  prejudices. 
Such  high  functions  cannot  be  performed  by  ordinary 
men  ; and  those  who  do  perform  them  faithfully  are  the 
noblest  benefactors  of  mankind. 

If  it  be  true,  as  I have  suggested,  that  commerce, 
punctuality  and  integrity,  are  less  regarded  here  than 
in  Europe,  we  should  inquire  into  the  reason  of  the  dif- 


9 


ference.  The  cause  of  many  of  our  failures  in  trade, 
and  of  the  irregularities  and  misconduct  which  follow 
them,  will  be  found  in  the  absolute  ignorance  of  the 
trader  of  the  business  in  which  he  embarked.  Every 
man  thinks  himself  qualified  to  be  a merchant,  as  if  by 
intuition  ; and  never  imagines  that  any  preparation  is 
necessary.  He  launches  upon  the  unknown  sea,  with- 
out experience,  without  knowledge,  without  chart  or 
compass;  and  is  soon  a stranded  wreck.  To  render 
himself  fit  to  exercise  the  profession  of  a lawyer,  a 
doctor,  or  the  simplest  mechanical  art,  the  candidate 
puts  himself  regularly  under  a course  of  tuition,  and 
labours  for  years  to  acquire  the  learning  and  mystery 
of  the  occupation.  Without  this  preparation,  it  would 
be  ridiculous  for  him  to  expect  the  patronage  or  coun- 
tenance of  the  community  in  his  undertaking.  Not  so 
with  trade.  A successful  mechanic  who,  by  his  industry 
and  skill,  has  accumulated  a few  thousand  dollars,  scorns 
the  honest  means  by  which  he  has  acquired  his  wealth, 
and  must  be  a merchant ; as  if  the  mysteries  of  commerce 
could  be  unfolded  on  a shop-board,  or  book  keeping 
were  as  simple  as  threading  a needle.  Why  could  he 
not  be  content  to  be  useful  and  respected,  in  the  business 
he  understood,  and  in  which  he  was  truly  respectable, 
and  reject  the  indulgence  of  a false  and  foolish  pride, 
which  cannot  but  expose  him  to  ridicule,  and  will  proba- 
bly strip  him  of  his  well  earned  property?  He  would 
think  it  very  preposterous  if  a merchant  were,  in  the 
same  manner,  to  take  up  his  craft;  and  is  it  less  so  for 
him  to  step  into  the  path  of  the  merchant?  Is  it  more 

B 


10 


easy  to  open  the  springs  and  manage  the  currents  of 
commerce  ; to  plan  a voyage  of  adventure  and  calculate 
its  contingencies ; to  provide  and  regulate  the  funds  and 
finances  of  various  extensive  mercantile  operations,  so 
that  they  shall  meet  every  want  at  the  proper  time  and 
place : than  to  cut  a coat  or  shape  a hat.  The  mechan- 
ics of  our  city  are  as  conspicuous  for  their  liberality  and 
integrity,  as  for  their  industry  and  skill ; and  it  is  only 
when  they  leave  their  proper  employment  and  cease  to 
be  mechanics,  that  they  lose  their  high  standing.  Does 
any  one  believe  that  commerce  is  so  low  in  the  scale  of 
human  affairs,  that  the  qualifications  it  demands  are  so 
common,  as  to  require  no  education  suitable  for  them  ; 
no  experience  to  acquire  them  ? Why  should  it  not  be 
necessary  for  one  who  aims  at  the  honours  and  profits  of 
trade,  who  expects  to  be  distinguished  by  ability  and 
success  as  a merchant,  to  undergo  a process  of  preparation, 
to  obtain  a knowledge  of  his  art  ? Why  should  he  not 
begin  his  career  in  a counting-house,  where  he  would 
see  the  practical  operations  of  business,  in  its  various 
branches  ; where  he  could  acquire  habits  of  system, 
regularity  and  exactness  ; understand  thoroughly  the 
science  of  accounts ; learn  to  distinguish  with  prompt- 
ness and  accuracy,  the  qualities  of  merchandize ; the 
fluctuations  of  the  market,  by  the  causes  which  usually 
affect  them  ; and  get  a tact  of  caution  and  foresight,  of 
calculation  and  decision,  which  alone  can  secure  a safe 
and  continued  prosperity.  It  is  thus,  I understand,  that 
merchants  who  deserve,  or  even  aspire  to  the  name,  are 
made  in  other  countries.  Not  so  with  us.  A man  but 


11 


says,  I will  be  a merchant — and.  he  is  a merchant.  The 
creation  of  light  was  scarcely  more  instantaneous. 
Whatever  may  have  been  his  previous  education  or 
occupation — or  if  wanting  in  both — if  he  can  open  a 
counting-house,  and  get  an  indorser,  he  is  a merchant ; 
and,  as  such,  repairs  to  the  Coffee-house,  and  is  at  once 
admitted  into  the  fraternity.  He  puts  on  a bold  face 
and  a brave  spirit,  dashes  at  any  thing  that  offers  in  the 
way  of  doing  business,  however  desperate ; and  finds 
every  body  eager  to  trust  him.  He  relies  on  chances 
which  are  a hundred  to  one  against  him  ; and  his  very 
hardihood  obtains  for  him  consideration  and  credit.  His 
adventure  is  put  to  sea ; he  hopes  to  enter  a closely 
blockaded  port,  or,  by  some  miraculous  accident,  to 
make  money  where  all  others  have  lost  it.  If  the  issue 
is  against  him,  he  calls  his  creditors  together,  rather  with 
a sort  of  pride,  for  it  proves  that  he  has  been  doing 
business,  than  with  any  feeling  of  humiliation,  and  tells 
them,  what  they  might  have  known  before — that  he  is 
ruined,  and  has  nothing  to  pay  them  ; asks,  as  a matter 
of  course,  for  a release  from  them,  and  is  exceedingly 
offended  if  they  hesitate  or  require  any  explanations  of 
his  proceedings  and  expenditures — his  property  and  his 
losses.  Fairly  cut  loose  from  his  debts,  he  sets  out  for 
new  experiments  and  adventures,  of  the  same  character. 
If,  on  the  other  hand,  he  should,  against  all  reason  and 
experience,  succeed  in  his  enterprize,  although  by  a 
prodigy,  and  without  an  atom  of  knowledge,  foresight 
or  skill,  he,  at  once,  becomes  a great  merchant ; he  is 
an  important  man  on  ’change  ; is  regarded  with  peculiar 


12 


deference ; his  acquaintance  and  business  are  eagerly 
sought ; his  credit  has  no  bounds,  in  banks  and  out  of 
banks  ; he  borrows  and  buys  at  his  pleasure  $ and,  after  a 
brilliant  run  of  a few  years,  perhaps  of  a few  months,  he 
falls  into  irretrievable  ruin,  brought  on  by  the  encoui’- 
agement  of  his  first  success,  the  importance  and  flattery 
he  derived  from  it,  and  as  the  inevitable,  although  pro- 
crastinated, result  of  ignorance  and  incapacity  in  the 
business  he  was  engaged  in. 

I consider,  then,  this  to  be  one  of  the  causes  of  the 
want  of  elevation  in  the  character  of  an  American  mer- 
chant— that  men  assume  it,  who  are  utterly  unqualified 
for  its  high  offices,  by  their  general  education,  by  their 
particular  education,  by  the  knowledge  and  acquirements, 
which  are  indispensable  to  command  respect,  and  obtain 
a continued  and  honourable  success. 

There  are  other  causes,  still  more  grave  and  disrepu- 
table, of  disasters  in  our  trading  community.  I would 
particularly  refer  to  the  system  of  indorsing , which 
prevails  ; the  facility  of  obtaining  credit  on  the  faith  of 
mere  names,  and  the  contrivances  and  deceptions  which 
are  resorted  to,  to  keep  up  the  false  and  hollow  credit 
thus  obtained,  and  to  postpone,  as  long  as  possible,  the 
inevitable  explosion,  even  after  it  is  known  to  be  inevita- 
ble. This  is  rank  dishonesty.  Whenever  a trader 
knows  that  he  cannot  hold  his  ground,  he  should  at  once 
give  it  up,  and  not  strive  to  prop  himself  by  expedients 
of  buying  and  borrowing — of  indorsements  and  credits, 
which  but  sink  him  deeper  in  debt,  and  draw  his  con- 
fiding friends  into  his  difficulties.  But  what  is  the  value 


13 


of  an  Indorser  in  our  system  business?  An  indorsement 
purports  to  be  a surety  for  the  payment  of  the  note  ; an 
additional  security  to  the  responsibility  of  the  drawer. 
How  seldom  is  it  in  fact?  Yet  such  is  the  competition 
for  business;  the  eagerness  even  to  seem  to  be  fully  en- 
gaged in  it,  that  such  securities  are  seized  upon  as  if  they 
were  as  sure  as  a bond  of  fate.  Experience  has  taught 
everyone,  that  the  Drawer  and  Indorser  are  so  linked  in 
with  each  other,  so  equally  bound  in  mutual  responsi- 
bilities, that  the  failure  of  one  is  the  failure  of  the  other, 
and  the  security  of  both,  no  better  than  that  of  either. 
Credit!  Credit  ! is  the  fatal  bane  of  commercial  pros- 
perity— of  commercial  honour  and  honesty.  The  transac- 
tions of  business  are  little  better  than  fictions.  Goods 
are  sold  which  have  never  been  paid  for — and  a note  is 
taken  for  them  which  will  never  be  paid.  And  this  is 
called  doing  business.  This  is  followed  by  forced  sales 
and  ruinous  sacrifices  of  property  for  immediate,  but 
temporary,  relief — and  the  whole  winds  up  with  an 
assignment,  when  there  is  nothing  of  any  value  to  assign. 
A consequence  of  this  state  of  things  is,  that  the  true 
merchant,  with  a substantial  and  responsible  capital,  is 
deprived  of  his  fair  business  and  profits  by  a swarm  of 
pennyless  speculators,  who  do  sell,  and  must  sell,  for 
whatever  price  they  can  get,  for  the  moment  the  bale 
stops  rolling,  they  cease  to  exist.  This,  assuredly,  is  an 
unwholesome  state  of  trade,  and  corrupts  and  undermines 
the  whole  commercial  community.  Who  has  not  been 
astonished,  when  bankruptcy  comes  upon  such  a trader, 
by  the  enormous  extent  of  his  debts,  that  is,  of  his 


14 


credits,  in  proportion  to  any  property  he  possessed  ; in 
proportion,  too,  to  his  apparent  business.  He  is  a very 
small  trader,  indeed,  who  breaks  for  less  than  fifty  or  an 
hundred  thousand  dollars;  and  he  is  a very  uncommon 
one  who  has  as  many  hundred  cents  to  pay  them. 

Money  so  easily  got,  is  as  lightly  spent;  and  brings  us 
to  another  dark  and  deep  stain  on  our  commercial  repu- 
tation. The  proud  splendour,  the  heedless  extravagance, 
the  unbounded  luxury,  in  which  these  ephemeral  princes 
indulge  themselves,  is  shockingly  immoral,  when,  at  the 
conclusion  of  the  pageant,  it  appears  that  it  was  got  up  at 
the  expense,  perhaps  on  the  ruin,  of  creditors.  Magni- 
ficent mansions,  in  town  and  country,  gorgeous  furniture, 
shining  equipages,  costly  entertainments,  in  short  a style 
of  living,  an  exuberance  of  expenditure,  which  would 
be  unwise,  in  our  country,  in  any  state  of  fortune,  and 
is  absolutely  criminal  in  the  actual  circumstances  of  the 
spendthrift.  When  the  blow  falls  that  prostrates  this 
grandeur,  what  efforts  are  made  upon  the  good  nature  of 
the  creditors  to  retain  as  much  as  possible  of  these  gaudy 
trappings  for  the  family,  instead  of  casting  them  away 
as  the  testimonies  of  deception  and  dishonour.  Little 
consciousness  is  shown  for  the  injuries  and  losses  of  those 
who  have  fed,  with  their  substance,  the  bloated  folly  of 
the  delinquent;  little  regard  to  public  opinion,  or  sense 
of  decorum  or  shame ; but  every  thing  is  hurried  to  a 
conclusion,  that  he  may  resume,  what  he  calls,  his  busi- 
ness, and  betray  again. 

Should  I forbear  to  give  utterance  to  a reflection 
which  rises  here — domestic,  it  is  true,  but  of  infinite 


15 


concern  to  a heart  that  has  not  smothered  the  sensibili- 
ties and  duties  of  nature,  as  well  as  the  obligations  of 
justice?  If  the  splendid  impostor  should  not  live  to 
make  his  arrangements  with  his  creditors,  but  be  cut  off 
before  he  has  run  his  course  of  dissipation,  in  the  very 
midst  of  his  enjoyments;  what  a scene  of  desolation  and 
distress  begins  in  his  house.  The  wand  is  broken,  and 
realities  take  the  place  of  delusive  visions  of  happiness 
and  wealth.  Every  thing  is  torn  away  to  satisfy  abused 
and  irritated  creditors;  scarcely  a comfort  is  left, 
where,  but  just  now,  all  was  abundance  and  luxury. 


“ Here  stood  a ruffian,  with  a horrid  face, 

Lording  it  o’er  a pile  of  massy  plate, 

Tumbled  into  a heap,  for  public  sale; 

There  was  another,  making  villainous  jests 
At  thy  undoing;  he  had  ta’en  possession 
Of  all  thy  ancient,  most  domestic  ornaments, 

Rich  hangings  intermix’d  and  wrought  with  gold.” 

And  his  afflicted  wife  and  children — what  is  their 
condition  ? Accustomed  to  the  most  delicate  and  costly 
indulgences;  with  every  wish  anticipated — every  sense 
of  pleasure  gratified ; so  protected  that  the  winds  of 
Heaven  might  not  visit  them  too  roughly;  unconscious 
of  danger;  they,  in  a moment,  find  themselves  pennyless, 
helpless,  hopeless.  Is  there  no  immorality  in  this? 
Is  it  not  a clamorous  sin  to  deceive  and  destroy  those 
dear  and  innocent  beings,  that  should  reach  the  offender 
in  his  grave?  If  he  could  respond  to  it,  he  would  cry, 
u 0,  I have  ta’en  too  little  care  of  this.” 


16 


When  a trader  is  brought  to  bankruptcy,  by  what- 
ever means,  important,  moral  duties  are  imposed  upon 
him,  and  he  will  preserve  his  character  or  deepen  his 
condemnation,  as  he  shall  faithfully  discharge,  or  obsti- 
nately disregard  them.  Opinions  have  got  a footing 
among  mercantile  men — a code  of  ethics  has  received  a 
sanction  from  them — which  appear  to  me  to  be  altogether 
wanting  in  sound  principles  of  justice  and  morality.  Be- 
fore I speak  of  these,  I will  go  a little  back  into  the  situa- 
tion of  the  Bankrupt,  in  which  very  few  conduct  them- 
selves conscientiously.  I have  already  alluded  to  it.  It 
rarely  happens  that  the  ruin  of  a merchant  is  effected  at  a 
single  blow,  by  one  unlooked-for  mischance.  It  is  more 
usually  the  result  of  a series  of  unfortunate  events,  or 
imprudent  expenditures,  each  bringing  him  nearer  to 
the  catastrophe.  He  has  many  significant  warnings  of 
his  fall,  and  cannot  but  see  its  approach,  when  he  dares 
to  look  steadily  towards  it.  But  it  is  this  which  he 
sedulously  avoids.  He  shuts  his  eyes  upon  it ; he  strives 
to  deceive  himself,  and  continues  to  deceive  others.  He 
turns  from  expedient  to  expedient,  from  bank  to  bank, 
from  friend  to  friend,  still  increasing  his  debts  and  his  diffi- 
culties, until  he  can  struggle  no  longer,  and  sinks  under 
a load  doubled  or  trebled  by  his  desperate  efforts  to  ex- 
tricate himself.  If  he  had  had  the  wisdom,  the  manli- 
ness, the  honesty,  to  yield  to  the  pressure,  when  it  first 
became  too  heavy  for  him,  how  many  sacrifices  would 
have  been  saved,  how  many  debts  avoided,  how  much 
injury  and  discontent  prevented.  This  weakness,  this 
reluctance  to  surrender  when  we  know,  or  ought  to 


17 


know,  that  we  cannot  sustain  the  contest,  is  the  source  of 
much  of  the  calamity  and  misconduct  which  attend  an 
insolvency.  It  is  confessed  and  regretted  too  late. 

We  come  now  to  the  period  when  the  struggle  is  over. 
The  failure  is  admitted  and  announced.  In  this  state  of 
his  affairs,  what  should  a just  and  faithful  man  believe 
to  be  his  duty?  The  answer  to  this  question  would 
present  itself  without  hesitation,  to  an  ingenuous  mind, 
uncorrupted  by  unsound  opinions,  unfettered  by  po- 
litic customs.  The  answer  would  be,  I will  surrender 
to  my  creditors  my  property  of  every  description,  for  in 
truth  it  is  theirs,  to  be  distributed  among  them,  in  pro- 
portion to  their  respective  debts — untrammelled  by  any 
conditions  for  my  own  advantage,  unimpaired  by  any 
disposition  or  incumbrance  made  with  a view  to  my 
insolvency t;  and  I will  depend  upon  their  liberality 
and  my  own  industry,  guarded  by  more  caution  and 
economy,  for  my  future  fortune  and  support.  Such  a 
man  would  come  again  into  business  entitled  to  public 
confidence,  and  he  would  receive  it ; he  would  come 
chastened  and  instructed  by  the  school  of  misfortune, 
and,  by  the  upright  prudence  of  his  second  course,  re- 
deem the  errors  of  the  first.  How  different  is  the  course 
generally  taken.  The  debtor  constitutes  himself  the 
sole  judge  between  him  and  his  creditors  ; he  sits  down 
to  make,  at  his  pleasure,  what  he  calls  an  assignment;  he 
deals  out  his  estate  in  such  portions  and  to  such  persons 
as  he  may  deem  most  expedient  or  find  most  agreeable ; 
he  dictates  the  terms,  having  an  especial  regard  to  him- 
self, on  which  the  five  or  ten  per  cent  shall  be  paid  to 
c 


18 


the  claimants;  he  selects  the  persons,  of  course  his  kindest 
friends,  who  shall  execute  these  trusts ; and  when  every 
thing  is  thus  prepared,  he  summons  his  creditors  to  meet 
him:  not  for  consultation;  not  to  learn  their  opinions  and 
wishes  about  their  own  interests ; not  to  ask  them  what 
he  shall  do , but  to  tell  them  what  he  has  done,  to  pro- 
nounce his  judgment  upon  them.  In  this  arrangement, 
it  is  almost  universal  to  find  the  greater  part,  sometimes 
the  whole,  of  the  property  given  to  what  are  called  pre- 
ferred creditors , among  whom  indorsers,  generally,  hold 
a conspicuous  place.  I have  never  ceased  to  repro- 
bate this  practice;  and  to  believe  that  it  has  no  justifica- 
tion in  any  principle  of  right  or  good  conscience.  What 
is  the  superior  claim  of  an  indorser  to  indemnity  and 
payment?  He  was  fully  aware  of  the  hazard  when  he 
made  the  engagement ; it  was  as  much  an  ordinary  risk  of 
trade  as  the  sale  of  merchandize.  He  took  the  risk  upon 
himself  without  asking  any  other  security  than  the  sol- 
vency and  good  faith  of  the  drawer.  The  vendor  of 
goods  does  the  same.  On  this  security,  the  one  gives 
his  name  and  the  other  his  property;  the  latter  expects 
nothing  but  the  payment  of  his  debt,  while  in  nine  cases 
of  ten,  the  former  receives  the  same  favour  he  bestows. 
And  yet  this  indorser  is  to  be  preferred  to  the  man  who 
has  delivered  his  goods,  his  labour,  his  money,  on  the 
faith,  probably,  of  the  false  credit,  of  the  unsubstantial 
display  of  wealth,  made  by  the  aid  of  the  indorser,  whose 
name  and  promise  have  thus  been  the  instruments  of 
deception,  the  lures  to  entice  the  unsuspecting  into  a 
vortex  of  ruin,  against  which  the  indorser  expects  to  be 
protected  by  the  virtue  of  an  assignment.  And  the  case 


19 


is  aggravated ; it  becomes  a case  of  unqualified  plunder, 
when  this  indorser,  after  putting  his  preference  into  his 
pocket,  never  pays  the  engagement  for  which  it  was 
given,  but  settles  with  his  creditors  in  the  same  way. 
Can  we  imagine  any  thing  more  shocking  to  every  sense 
of  justice  and  morality,  than  that  an  honest  dealer,  who, 
but  a few  days  before  the  failure  of  his  debtor,  had  de- 
livered to  him  goods,  at  a fair  price,  should  be  called  to 
witness  his  bales  of  merchandize,  his  barrels  of  flour, 
handed  over,  just  as  they  were  received  from  him,  to  some 
preferred,  favourite  creditor,  under  the  pretence  that 
he  was  an  indorser,  or  under  some  pretence  equally  ini- 
quitous. Yet  such  things  have  happened ; you  all 
know  it : and  neither  shame  or  dishonour  has  overwhelm- 
ed the  perpetrator  of  them.  I regret  that  time  and 
occasion  do  not  allow  me  to  speak  more  fully  of  this 
usage,  this  system  of  preferences ; to  expose  its  injustice, 
its  impolicy,  its  pernicious  effects  on  fair  trading;  and  to 
show  you  that  while  it  is  supported,  it  is  vain  to  expect 
a healthy  state  of  commercial  credit,  a conscientious  cau- 
tion in  contracting  debts,  or  an  honest  endeavour  to  dis- 
charge them. 

From  this  condemnation  of  preferences,  I would  be  un- 
derstood to  except  a peculiar  case,  that  is,  the  case  of 
money,  or  other  property,  deposited  in  trust.  This 
should  be  sacred.  It  has  nothing  to  do  with  the  trus- 
tee’s business  or  trade;  no  interest  or  profit  was  derived 
from  it  by  the  owner ; it  was  never  intended  to  be  ex- 
posed to  any  risk.  In  fact,  it  never,  in  any  just  acceptation, 
became  a part  of  the  property  of  the  trustee,  assignable  by 


20 


him,  as  such.  It  never  was,  morally,  at  his  disposal  for 
any  other  uses  or  purposes  than  such  as  were  designated 
by  the  terms  of  the  trust.  He  had  the  legal  possession 
of  it,  but  the  property  never  ceased  to  be  in  the  party 
by  whom,  or  for  whom,  it  was  deposited.  To  prefer  such 
a claim  in  case  of  insolvency,  is  but  to  return  the  money 
to  its  rightful  owner,  as  you  would  return  a borrowed 
horse,  or  any  other  specific  article ; and  there  can  be 
no  ground  of  complaint  for  any  body. 

If  the  evils  of  which  I have  spoken  exist  in  our  com- 
mercial community  ; if  they  are  not  only  producing  dis- 
tress and  ruin  at  home,  but  are  dishonouring  the  Ameri- 
can name  abroad  ; we  should  anxiously  desire  to  remove 
them  ; we  should  seek  for,  and  apply  the  remedy.  That 
remedy  ought  to  be  found  in  the  laws  of  our  country,  so 
far  as  laws  can  reach  the  disease  ; but  it  is  in  vain  that 
we  look  there  for  redress  ; on  the  contrary,  it  is  in  the 
defects  of  our  law  that  we  find  the  source  of  the  mischief. 
Every  thing  seems  to  have  been  done  by  our  legislators 
to  favour  the  debtor,  be  he  honest  or  not ; and  to  weaken 
the  rights  of  creditors,  to  put  them  at  the  mercy  of  the 
debtor  to  receive  from  him  just  so  much  justice  as  he 
may  choose  to  accord  to  them ; and  to  deny  to  them  a 
reasonable  and  satisfactory  account  from  the  man  who 
first  defrauds,  and  then  defies  them.  We  have  no  bank- 
rupt law  by  which  a power  is  given  to  competent  persons 
to  examine  closely  and  particularly,  in  what  manner,  for 
what  purposes  the  debts  of  the  bankrupt  were  contracted; 
whether  in  the  fair  and  regular  pursuit  of  his  business, 
or  in  the  indulgence  of  flagrant  immoralities  and  vices ; 


21 


to  search  deeply,  and  with  the  means  of  forcing  out  the 
truth,  into  the  means  by  which  his  property  has  been  lost 
or  disposed  of ; to  ferret  and  foil  every  attempt  at  con- 
cealment, to  lay  all  his  transactions  bare,  and  to  insist  upon 
explicit  and  satisfactory  explanations  of  all  that  is  doubt- 
ful ; and,  when  this  purifying  process  is  completed,  to  dis- 
tribute all  the  effects  obtained  by  it,  honestly  and  equally 
among  the  creditors,  in  proportion  to  their  respective 
debts.  We  hear  of  no  preferences  to  indorsers ; no  fa- 
vours to  friends;  no  partial  assignments  for  special  objects, 
which  are  just  so  many  means  by  which  an  insolvent  may 
stipulate  for,  and  cover  benefits  for  himself;  and  finally, 
while  a bankrupt  law  inflicts  terrible  penalties  upon  a 
fraudulent,  prevaricating,  perjured  debtor,  it  holds  out 
cheering  inducements  and  honourable  rewards  to  the 
open  and  upright  man ; it  cherishes  and  protects  the 
unfortunate  but  honest  debtor,  and  returns  to  him  a part 
of  his  substance,  to  supply  his  wants,  and  resume  his 
business. 

Very  different  are  the  character  and  influence  of  our 
insolvent  laws ; at  least  in  Pennsylvania.  They  do  not 
affect  to  make  any  distinction  between  honesty  and  dis- 
honesty ; between  the  man  who  has  been  ruined  by  the 
casualties  of  trade,  and  one  who  has  wasted  his  estate 
in  the  most  nefarious  course  of  dissipation  and  vice.  If 
it  be  manifest,  if  it  be  confessed,  that  the  petitioner  has 
poured  out  his  money,  or  rather  the  money  of  his  credi- 
tors, in  the  dens  of  gambling,  or  the  stews  of  prostitution ; 
it  is  nothing.  If  his  debts  have  been  contracted  by  false 
promises — by  broken  faith — by  fraudulent  pretences — by 


22 


the  basest  contrivances ; it  is  nothing:  he  will,  neverthe- 
less, receive  the  benefit  of  the  laws  intended,  one  would 
presume,  for  the  relief  of  unfortunate  debtors.  He 
demands  and  obtains  this  relief ; although  he  may  stand 
before  the  court  which  awards  it  to  him,  a convicted,  an 
avowed  swindler.  The  only  matter  to  be  investigated 
—the  only  question  to  be  answered  is,  do  you  now  offer 
to  deliver  up,  for  the  use  of  your  creditors,  all  the  pro- 
perty you  possess.  When  a debtor  holds  such  a power 
over  his  estate  to  the  last  moment,  what  will  there  be 
left  to  be  delivered  up  ? It  is  true,  the  mockery  of  an 
assignment  is  gone  through  ; but  it  is  so  well  understood 
that  there  is  nothing  to  be  transferred  by  it,  that  it 
rarely  happens  that  the  assignees  take  upon  themselves 
the  empty  trust,  or  are  put  in  possession  of  one  dollar 
by  virtue  of  it. 

As  our  laws  between  debtor  and  creditor  rather  en- 
courage than  suppress  the  evils  and  impositions  of  which 
we  have  spoken,  so  corruptive  of  our  commercial  in- 
tegrity and  so  injurious  to  our  national  character,  there 
is  but  one  other  tribunal  to  which  we  can  refer  for  their 
correction.  Public  opinion  must  inculcate  sound  doc- 
trines, and  visit  with  indignation  those  who  offend  them. 
While  the  truly  unfortunate  and  insolvent  should  be 
treated  with  tenderness;  should  be  relieved,  by  a liberal 
indulgence;  and  encouraged,  and  enabled,  by  a generous 
assistance,  to  re-establish  himself,  and  retrieve  his  for- 
tunes by  increased  industry  and  economy  : the  careless 
spendthrift,  the  rash  and  reckless  adventurer,  the  slave 
of  vicious  indulgences,  who  sports  with  property  not  his 


23 


own,  and  lavishes  uncounted  sums  to  glut  his  pride  and 
pamper  voluptuous  appetites,  should  be  made  to  feel  his 
crimes  and  his  degradation  by  the  withering  neglect  of 
the  whole  community. 

The  topics  which  I have  endeavoured  to  bring  to 
your  consideration  are  far  too  extensive  in  their  illustra- 
tions and  importance  to  be  compressed,  with  the  justice 
that  is  due  to  them,  within  the  compass  of  a single  lec- 
ture. I have  not  hoped  for  more,  on  this  occasion,  than 
to  present  them  to  you  in  their  broad  and  general  aspects, 
and  to  invite  you  to  give  them  a more  full  and  exact 
examination  in  your  own  reflections.  Look  to  your 
experience,  to  that  which  has  passed  and  is  passing 
under  your  eyes,  for  the  truth  of  the  facts  I have  stated; 
and,  for  the  principles  I would  inculcate,  turn  to  the 
fair  unprejudiced  suggestions  of  your  own  hearts  and 
understandings.  Do  not  believe  that  there  is  one  sort  of 
honesty,  one  code  of  morality,  for  your  business,  and  an- 
other for  your  ordinary  transactions;  that  you  may  de- 
ceive and  ruin  a man,  in  the  way  of  trade,  while  you 
would  shrink  from  taking  a toothpick  from  his  pocket ; 
that  any  thing  can  be  just  and  honourable  in  a merchant, 
that  is  not  so  in  the  man  and  the  citizen,  in  the  gentle- 
man and  the  Christian.  Such  distinctions  may  satisfy 
the  ethics  of  a vicious  cupidity,  and  quiet  the  conscience 
of  one  who  would  be  honest  only  for  the  world’s  eye, 
and  to  avoid  the  penalties  of  crime  ; but  can  never  be 
sanctioned  by  a pure  and  uncorrupted  mind. 

As  a summary  of  the  doctrines  I teach  and  desire  to 
impress  upon  you,  let  me  add,  that  debts  contracted  in 


24 


the  indulgence  of  extravagant  and  unbecoming  luxuries, 
or  in  the  pursuit  of  rash  and  desperate  adventures,  are 
a violation  of  the  sound  principles  of  mercantile  integrity: 
that  the  true  merchant  will  thoroughly  qualify  himself 
for  his  business  by  a patient  and  systematic  preparation, 
and  will  depend  upon  the  regular  operations  of  legitimate 
commerce  for  his  profits,  which,  though  more  slow,  are, 
finally,  more  certain  and  lasting  than  th.e  fluctuating 
gains  of  speculation  : that  if  misfortunes  and  bank- 
ruptcy should  fall  upon  him,  he  will  meet  them  promptly 
and  manfully,  and  not  attempt  to  gain  a few  lingering 
days  of  credit  for  himself,  by  drawing  his  friends  into  the 
vortex  of  his  ruin,  and  extending  it  to  those  who  may, 
unwittingly,  continue  to  trust  him : that  he  will  at  once 
surrender,  into  the  hands  his  creditors  shall  choose  to 
hold  the  trusts  for  them,  all  the  property  in  his  possession 
or  power,  unfettered  by  selfish  stipulations  for  his  own 
benefit,  undiminished  by  any  concealment,  or  by  assign- 
ments or  transfers  to  favourites  of  any  description. 
While  you  approve  and  expect  such  a course  of  conduct 
from  others,  do  not  depart  from  it  yourself,  and  be  ex- 
posed to  the  reproof  so  often  merited — 

“ What  eagles  are  we  still 

In  matters  that  belong  to  other  men; 

What  beetles  in  our  own.” 


